It has been 126 years since Alexander Graham Bell invented the telephone and around 50 years since Indonesia had its own
telephone company.

Unfortunately, the penetration of telephones in Indonesia today (2004), counting fixed as well as mobile telephone lines
in use, is only 10.45% according to the figures published by the Directorate of Post and Telecommunications.

This paper will point out the inherent problems Indonesia has with regards to telephone penetration and take you through
some of the solutions to overcome them.

There are two main problems regarding the low penetration of telephone lines. Firstly, the typology of Indonesia. As the
world's largest archipelago country, Indonesia faces the severe challenges of infrastructure and "mainland" connectivity.
Indonesia has more than 17 thousand islands with 5 big islands. With such spreads, cabling and connectivity infrastructure
requires huge investments and efforts.

Secondly, the uneven spread of its approximately 220 million population. Most of the population is residing in Java and Bali
(60% or 124 million). 43.2 million people (21%) live in Sumatra, 5.5% in Kalimantan, 7.2% in Sulawesi, while about 2.1% of
Indonesia's population dwell in the Molluca islands and Papua (West Irian). With this equation, it has not been possible for
the incumbent phone company to answer the telecommunications needs of small and remote communities, even for many locations
in Java and Sumatra.

Based on the penetration figures of fixed and mobile telephone, the number of PCs and Internet users, Indonesia lags far behind
many other countries in the world. According to ITU Reports, the 2002 penetration of fixed lines in Indonesia was 3.60 telephone
lines per 100 population, and cellular subscribers reached 5.52 per 100 population. This number is far behind Indonesia's neighbors
such as Malaysia, Singapore, Thailand and also China. Indonesia's penetration of phone lines is only one fourth of Asia's average
penetration. See Table 1.

Within Indonesia itself, the penetration also differs greatly from province to province. The penetration in Java is more than
twice as high as in Kalimantan and other eastern islands of Indonesia. According to statistics from PT Telkom, its fixed telephone
lines in use in the greater Jakarta area reached a penetration of 32.5 % in the Second Quarter of 2003.

Solutions

Satellite technology conveniently strikes observers as the only feasible solution to rise up to the challenge of catering to
Indonesia's telecommunications needs. Satellites have a wide reach and can cover all of Indonesia.

Currently there are 4 satellite operators in Indonesia: PT. Pasifik Satelit Nusantara, PT. Telkom, PT. Indosat (the original
satellite operator, PT. Satelindo recently merged with PT Indosat), and PT. Mediacitra Indostar (Direct Broadcasting by Satellite).
Most of the C-Band transponders of Palapa Satellites B2R, B4, C1, C2 are operated by PT. Telkom and PT. Indosat.PT. Pasifik Satelit
Nusantara (PSN) owns the Ext-C band transponders in both Palapa C1 and C2. PSN has also part ownership in the Garuda-1 satellite
which covers a significant part of South East Asia and the Asian mainland for Mobile Satellite Service.

Before PSN commenced operations, earth terminals were still too expensive as allow for major extension of services into the
unserved areas of our nation.

Pasifik Satelit Nusantara

PSN is Indonesia's first private satellite telecommunications company in Indonesia. This Indonesia-based company focuses on becoming
a fully integrated provider of satellite-based telecommunications products and services in the region. Being a satellite operator and
with its products BYRU (Satellite GSM), PASTI (Portable Fixed Satellite), and BINA (Integrated Data Communication Network), PSN aims to
pursue its vision "to serve the unserved." Providing isolated areas with telecommunications, the digital divide now existing may be
eliminated or narrowed at some point in future.

The current achievements of PSN cannot be separated from its CEO, Adi Rahman Adiwoso, who founded the company together with Iskandar
Alisjahbana in 1992. They foresaw that Indonesia's telecommunication problems can only be solved using satellite technologies and they
also believed that private companies have to be given the chance to become satellite operators. At that time, Telkom was the only satellite
telecommunications operator in Indonesia.

In the later part of this paper, we will show the satellite network PSN has developed, utilizing the Garuda 1 satellite. Using this
network, local small holders have established numerous Public Calling Centers, so that the surrounding community is able to communicate
for economic and social purposes. These Public Call Centers are commercial ventures and help to bring communications to the 72,000
villages in Indonesia. However, there is still a serious gap, because not all locations can be served in a commercially viable manner.
In 2003, there remained 43,000 villages without any telephone access.

Government efforts to eliminate the digital divide in Indonesia are realized, among other ways, through the Universal Service Obligation
Program (USO-program) in which PSN has been assigned a major role. There are also programs sponsored by the Ministry of Education in
bringing about communications to isolated Secondary Schools, again using PSN's network and services. For Indonesia's 2004 General Elections,
PSN had to build data connection facilities in many 'unserved areas" so that those areas could send their vote counts to the General Election
Committee Data Center in Jakarta.

The USO Program

The technology of Garuda-1 is currently used by PSN to carry out the government sponsored universal service obligation (USO) project. The
International Telecommunication Union's definition of USO refers to household access to at least one telephone. For the moment, USO in Indonesia
is defined as the access to a telephone for public use (through Public Call Centers) in rural and remote areas. Previously, based on the
Telecommunication Act No. 3/1989, USO was carried by PT. Telkom, as the monopoly holder of public telecommunications. Based on the current Law,
No 36/1999, USO shall be funded by government budget, telecommunications operators, and others. Starting in 2004, telecommunication operators in
Indonesia have to contribute 0.75% of their gross revenues to support the USO program.

It has been identified that there are around 43 thousand out of 72 thousand villages in Indonesia that do not have telephone access.
Therefore, to resolve this the Indonesian government estimated that they could budget the funds to reach all villages within 3 or 4 years
of completion. In practice, last year (2003), 3.010 USO phone lines were built, of which 2.975 locations were in the format of PSN's Fixed
Portable Satellite (FPS) technology called PASTI and 35 locations used another, more conventional, VSAT Technology. This number is way below
the original target of 8.370 lines to be completed in 2003. One of the problems is the deficiency of the state budget to cover the program
in 2003.

Implementing the USO program is a big challenge because most of the places are hard to reach given the poor means of transportation
and transport infrastructure. However, PSN imprints its success by completing the task of placing 2975 PASTIs all over Indonesia. In Sumatera,
PSN put 1.049 PASTIs, in Kalimantan 542, in the East part of Indonesia 1384 PASTIs with a speed of about 1,000 added locations a month. The
USO program is to continue beyond 2004.

PASTI is commonly operated as a pre-paid public pay phone where the villagers can use the phone and pay to the operator the charges displayed
on the equipment. The money is collected to buy re-fill vouchers for future use. Vouchers can easily be found in outlets spread all over
Indonesia.

Problems facing PSN in implementing the USO program required PSN's installation coordinator to made quick decisions. In 30 locations PSN
had to provide batteries, as there was no commercial power available. Some locations had to be cancelled or relocated because inhabitants had
left the village empty for security reasons. In reaching another location, the PSN installing crew had trouble with transport, and even had to
cope with a sunken boat.

General Election Project

For the first time in Indonesia's history, and as a result of the political reform in the country, direct election of the President and Vice
President have been instituted. The 2004 General Elections are conducted in 3 consecutive stages. In April 2004, the Parliamentary Election
allowed citizens to vote for members of Provincial and Regency House(s) of Representatives. In July, the elimination round for Presidential
candidates took place, leaving two final candidates for President. In September, the final round took place. Each Presidential candidate was
teamed up with his/her Vice Presidential candidate.

In 2004, also for the first time, Indonesia used information technology to deliver the results of vote counting at the sub-district or
"kecamatan" level directly to the General Election Data Center in Jakarta. Within each sub-district, voting results were conveyed manually
from the numerous voting stations to the sub-district capital. There are 5110 sub-districts all over Indonesia, and the General Election
Committee had chosen a total 4615 sub districts and regencies to be equipped with computers, Internet access and phone lines. Sub districts
that could not be connected through PT. Telkom lines (the incumbent telephone operator), used the satellite based telecommunication service
from PSN's PASTI. Of course, there were mostly in the more remote sub-districts. With a total of 1850 PASTI facilities placed in those
sub-districts, PSN again took up the challenge of serving the un-served areas. Using PASTIs, the operators in remote sub-districts sent the
results of vote counting through Intranet.

Through the system created for the 2004 General Elections, the result of approximately 500 thousands voting location could be shown
transparently within a week after election day, which is remarkable, considering the need for manually transporting data within sub-districts,
and verifying the data before transmitting. The experiences of PSN in providing facilities for data transmission points in those sub-districts
show the following facts. (a) There were more problems that stemmed from non-technical matters both in the April and in the July election days
(86% in July 2004) compared to problems of a technical nature (14%). Examples of human errors were: incorrect insertion of SIM card, incorrect
Access Code used, SIM-Card lost. (b) Learning goes fast. Comparing the performance of the April 2004 and the July 2004 election days shows that
certain locations that at the time of the April election failed to send data electronically (therefore causing delays by having to manually
forward the data to another data-transmitting location), had overcome this problem in the July vote counting process.